Euro holding on to gains

In currency trading, the euro stood firm against the dollar after surging on Friday in reaction to healthy economic data, including a gauge of the German business climate hitting an all-time high in November, despite political uncertainty.

There are also hopes Merkel can hammer out a deal to form a new government for Europe’s biggest economy.

The Social Democrats said they were ready to hold talks with the chancellor, who is facing pressure to reach an agreement to end weeks of turmoil.

The euro plunged last week after talks to form a new government with the pro-business Free Democrats (FDP) and the left-leaning Greens broke down, raising the prospect of fresh elections.

Adding to the upbeat euro sentiment was last week’s dovish Federal Reserve minutes that have led some traders to lower their expectations for the pace of US interest rate hikes, while the European Central Bank is looking more bullish.

“Too many positive developments to ignore suggests the market will set sights on the $1.2000 level,” Stephen Innes, head of Trading APAC at OANDA, said in a commentary.

“The market continues to underprice the ECB risk, but with the recent string of uproarious EU economic data, surely this will be too difficult for the ECB to ignore and at minimum moderate their lower for longer stance in spite of inflation undershooting expectations ”


This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Stephen Innes

Stephen Innes

Head of Trading APAC at OANDA
Stephen has over 25 years of experience in the financial markets and currently based in Singapore as the Head of Trading Asia Pacific with OANDA. Stephen's market views focus on the movement of G-10 and ASEAN Currencies. His views appear in Bloomberg, CNBC.Reuters, New York Times WSJ and the Economist. His media appearances include Bloomberg TV & Radio, BBC International, Sky TV, Channel News Asia, ASTRO AWANI and BFM Malaysia. Stephen has an extensive trading experience in Spot and Forward FX, Currency and Interest Rate Futures, Money Market Derivatives and Precious Metals. Before joining OANDA, he worked with organisations like Nat West, Chemical Bank, Garvin Guy Butler, and Sumitomo Mitsui Banking Corporation. Stephen was born in Glasgow, Scotland, and holds a Degree in Economics from the University of Western Ontario.
Stephen Innes